One Year Fixed Rate Business Bonds

Note

Eligible deposits with UK institutions are protected by the Financial Services Compensation Scheme up to a maximum level of protection of £85,000 per business per institution. The deposits of most non-financial services businesses are covered up to the £85,000 limit.

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1 year business bonds explained

Is fixing for one year a good idea?

Fixing for one year can be a great idea for those businesses that don’t mind losing access to a portion of their business savings for a set term. Their funds will be earning interest at a fixed rate and so they’re guaranteed to earn the amount expected at the end of the term, ensuring their money is working as hard as possible. One year is a relatively short timeframe to lose access as well, so could offer the ideal fixed rate savings solution for many businesses.

The drawback is that the money will be wholly inaccessible during the year, which means this kind of bond is only suitable for companies that have a comfortable level of financial cushioning elsewhere. For those who have more near-term plans, a business bond of up to one year could be more suitable, while those who are thinking longer term could consider a four- or even five-year business savings bond instead.

Can I withdraw my savings during the term?

No. Once the lump sum is deposited it must remain untouched for the 12-month term, with early access rarely allowed. Some providers will permit additional deposits, but this will usually only be for a limited period. Note that you’ll often have to set aside a much larger sum than you would for personal savings accounts, with minimum deposit requirements of £10,000 and even £20,000 not uncommon.

Can the interest rate change during the term?

One-year business bonds are fixed rate accounts, which means the interest rate cannot change during the term. This gives rate security while ensuring that future cashflow projections can be accurately managed – funds will always be earning interest at the agreed rate, which means you’ll know exactly how much you’ll earn by the end of the 12-month period.

Which bank offers the best rate?

There’s no easy answer to this, as rates can change quickly in the savings market, with providers continually re-evaluating their offers. This is why it’s so important to act quickly when you spot the best rates, as they may not be around for long.

There are a lot of high street brands active in this sector, with names such as Santander, Virgin Money and Bank of Scotland all offering one-year business savings bonds. Just bear in mind that the very best rates aren’t always offered by well-known UK banks and building societies. Indeed, take a look at our chart and you’ll see it’s often the smaller, challenger providers that take the top spot, so it’s always worth considering these brands as well as the big names. Start your comparison and find the best one-year business bonds in the UK.